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Tds deduction under reverse charge method

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Manish

Service

42 Points Posted on 05 August 2012

I am presenting three situation, would like openion of forum on the same

1) Bill for Car Hire Amount Rs 5000 no Tax is charges by service provider in Bill...How much payment to be made to service provider. What is the TDS to be deducted while making payment

2) Bill for Car Hire amounts to Rs 5000.Service Provider has charges full tax @ 12.36% apart from amount of Rs 5000. How much payment to be made to service Provider & what shoulld be TDS Amount

3) Bill for Car Hire amounts to Rs 5000. Service provider has charged tax @ 12.36% & has deducted from this amount service tax pertaining to Service receiver.What amout to be paid to service Provider & what should be TDS deduction.

Replies (1)

CA Unnikrishnan Nair N

Chartered Accountant

2114 Points Posted on 06 August 2012

Assumed that abatement of 60% is not claimed. Reverse tax mechanism operates in the ratio of 60%, 40%.

1. No ST charged on bill. Assume that the bill amount is inclusive of tax , reverse work the tax @ 12.36% . Apportion in 60;40 ratio. Pay your share of 40% of tax. Release the bill amount after deducting the 40% share of tax .

2.Split the tax in to 60;40, pay your 60 tax . Deduct this amount from payment to service provider.

3.Same as above.

TDS is on payment made to SP net of tax . This ahs been clarified by CBDT , only in the case of sec.194I.